U.S. Government Posts $3 Billion Budget Surplus

Source: TPM

The U.S. government posted a budget surplus of $3 billion in January, the first monthly surplus since September of 2012, Market Watch reported on Tuesday. The Treasury Department marked a 16% increase in revenues driven in part by the expiration of the payroll tax-cut which Congress and the White House let lapse during fiscal cliff negotiations on January 1.

At the direction of President Obama, Congress reduced the payroll tax rate from 6.2 percent to 4.2 percent in 2010, allowing the average U.S. household to pocket an additional $1,000 per year.

1. Misleading title - most readers will assume it's for the year not month.

2. AND, Slower Growth of Health Costs Eases U.S. Deficit.

A sharp and surprisingly persistent slowdown in the growth of health care costs is helping to narrow the federal deficit, leaving budget experts trying to figure out whether the trend will last and how much the slower growth could help alleviate the country’s long-term fiscal problems.

17. Actually, G.W. Bush had 33 months with budget surpluses but still managed to nearly double the debt

Bush's reign went from Jan 20, 2001 noon to Jan 20, 2009 noon, covering about the last 8 1/3 months of Fiscal Year 2001 through the first 3 2/3 months of Fiscal Year 2009
(Fiscal year 2001 runs from October 1, 2000 through September 30, 2001 and similarly for other fiscal years).

Well Bush was president during the last 8 1/3 months of Fiscal Year 2001, but had not had time to screw things up yet. Fiscal Year 2001 was the last year when there was a surplus for the entire year. Despite the substantial number of monthly surpluses throughout his reign, he managed to nearly double the national debt ( 1.86 X ), from 5,728 B$ to 10,627 B$.
URL: http://www.treasurydirect.gov/NP/BPDLogin?application=np

Number of months in each fiscal year that were surplus months:
(In below, the dots are used for spacing to keep columns aligned, because DU software compresses multiple consecutive spaces into 1 space)

In FY 2002 through FY 2008 -- all fiscal years where Bush was president the entire fiscal year -- there were 33 monthly surpluses. There were 4 more in the latter 8 months of FY 2001 but he doesn't deserve credit for those, since he inherited part of that year, and the entire FY 2001 budget, from Clinton.

Anyway, all this goes to show that monthly surpluses aren't that rare, even in years with large annual deficits.

9. Jan, Apr, Jun, Sept...

...are generally the months that have surpluses. Estimated taxes are due in the ex-April months, and of course yearly taxes are due in April.
I remember, however, downloading that spreadsheet a while back and figuring out that the deficit has been slowly but very surely declining since 2009. I'll have to see if I can dig that work up.

11. Here's a bit of the rant on deficits and spending over the past 4 years - and yes, the deficit has

been declining a bit...

Some righties telling you that Obama doubled the last Bush deficit, from less than 500 B$ to more than a trillion dollars?

They are trying to make you think that the last Bush year was Fiscal Year 2008. Actually, the last Bush budget (FY 2009) contained a projected deficit of $1.2 Trillion. Fiscal Year 2009 covers 10/1/08 - 9/30/09 -- the last 3 2/3 months of the Bush Administration plus the first 8 1/3 months of the Obama administration. The budget for FY 2009 was signed into law by Bush. It contained a projected $1.2 trillion deficit according to FactCheck.org:

Shortly before Obama assumed office, the nonpartisan Congressional Budget Office {on January 7, 2009} projected that the deficit for fiscal year 2009 would be $1.2 trillion ( http://cbo.gov/ftpdocs/99xx/doc9957/MainText.3.1.shtml ). {Bush left office and Obama assumed office on January 20, 2009 at noon}

The fiscal year ended on Sept. 30, 2009, with the deficit at $1.4 trillion. But only some of that was Obama’s doing. We conducted an exhaustive study of the spending bills Obama signed for that year, and concluded that Obama can be fairly assigned responsibility for a maximum of $203 billion in additional spending for fiscal 2009. Others put the amount lower: Economist Daniel J. Mitchell of the libertarian CATO Institute — who once served on the Republican staff of the Senate Finance Committee — has put the figure at $140 billion.

So FY 2012 federal spending (prelim) is only a $22 billion increase (0.62% increase) over FY 2009 (the last Bush budgeted year)

Since the nominal GDP increased by 13.44% between FY 2009 (a recession low point) and FY 2012 (see next paragraph), which is more than the 0.62% increase in federal spending, that means federal spending as a percentage of GDP actually dropped during those 3 years -- from 25.24% of GDP to 22.41% of GDP (calculations below)

See the previous section that explains that the Fiscal Year 2009 budget (Oct. 1, 2008 - Sept 30, 2009) was signed into law by G.W. Bush, and how the CBO on January 7, 2009 (13 days before Bush left office) projected a $1.2 trillion deficit for FY 2009. So all but about $200 billion of FY 2009 spending and deficits was "baked in" before Bush left office.

14. Graph That Backs That Up

What this shows is the yearly accumulated change in the deficit calculated from the mts spreadsheet. This is taken from the year over year change. For instance, this Jan showed a surplus of 2.8 billion, whereas last year in Jan we had a 27.4 bil deficit. The swing was 30.3 billion. December also had a large positive swing, from an 86 billion deficit last year to a 1.2 bil deficit this year. The improvement over the past year totals to 196.7 billion dollars.
As we start this year with this surplus in Jan, I'm guessing this will be the first "normal" year - one where Jan, Apr, Jun and Sept show surpluses, that we've had since 2008. One more milestone in the recovery from the disaster that was Bush's last couple of years.